Thailand's economy saw its biggest annual contraction in 22 years and a record quarterly fall in the April-June period, as the coronavirus pandemic and restriction measures hit tourism, exports and domestic activity, prompting an outlook downgrade.
Southeast Asia's second-largest economy, which is heavily reliant on tourism and exports, shrank 12.2% in the second quarter from a year earlier, the worst contraction since the Asian financial crisis in 1998, data from the state planning agency showed.
But that was better than a 13.3% slump seen in a Reuters poll, and compared with a downwardly revised 2.0% fall in the March quarter.
On a quarterly basis, the economy shrank a seasonally adjusted 9.7%, the deepest on record, but better than the 11.4% drop forecast by economists.
The National Economic and Social Development Council (NESDC) cut its gross domestic product forecast for 2020. It now expects Thailand's economy to shrink by 7.3%-7.8% this year, having previously forecast a 5%-6% contraction.
"Today's economic release underscores the collapse of aggregate demand, both externally and internally," said Kobsidthi Silpachai, head of capital markets research of Kasikornbank.
"Recovery will be lengthy as the shock to the demand and supply side has been the most severe in living memory," he said.
While Thailand has lifted most lockdown restrictions after seeing no local transmission of the coronavirus for over two months, its economy continues to suffer from an ongoing ban on incoming passenger flights and from tepid global demand.
The number of foreign visitors fell to zero in April-June, and Thailand has also shelved travel bubble plans amid new virus waves.
The planning agency expects only 6.7 million foreign tourists to come to Thailand this year, down 83% from last year's record 39.8 million.
The downturn comes despite government efforts to support the economy with a 1.9 trillion baht ($61.03 billion) fiscal stimulus package, while the central bank has also slashed interest rates by 75 basis points so far this year to a record low of 0.50%.
The impact of the lockdown and the travel ban will continue to affect domestic consumption and investment, with anti-government protests adding to the risks, while exports will remain weak due to soft global demand, analysts say.
The state planning agency also cut its forecast for exports this year, expecting them to fall 10% in 2020 versus a previous forecast for an 8% decline.